The Mediation Act, 2023: Paving The Way For India As A Mediation Hub

1. Promote and facilitate mediation;
2. Promote institutional mediation;
3. Enforce mediated settlement agreements;
4. Establish a regulatory body;
5. Encourage community mediation;
6. Make online mediation an acceptable and cost-effective method.

Though the objectives of the act are laudable, there is a need for closely analyzing the intricacies of its practical application.

The Act contains 11 chapters, 65 sections and 10 schedules. It is important to analyze the provisions of the Act from the prism of its avowed objectives and see whether these objectives are met and whether there are any lacunae that need to be filled.

A. Promote and facilitate mediation:

International mediation:

India, being a signatory to the Singapore Convention since 7^th August 2019, makes a notable effort towards recognizing international mediation as a growing dispute resolution mechanism. However, there is a definite need for the country to ratify the Singapore Convention to ensure enforcement. Further, the Mediation Act, also declares that all mediated settlement agreements reached through mediation done under the Act would be enforceable “in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a judgment or decree passed by a court…” This squarely brings such mediated settlement agreements within the mischief of the exception carved under Article 2(3)(a)(ii) of the Convention that makes the Convention inapplicable to settlement agreements that are enforceable as a judgement in the State of that court.

Therefore, if an international mediation (as defined under section 3(g) of the Act), takes place within India and under the Mediation Act, a party to the mediated settlement agreement reached in this mediation cannot invoke the Singapore Convention for its enforceability.

Yet another lacuna that emerges in respect of mediations in disputes arising out of matrimonial causes, family disputes, child custody disputes, property division disputes is where one of the parties may be residing abroad. By confining the definition of “international mediation” to commercial disputes alone, the Act excludes a large number of above-mentioned causes from its purview thereby limiting such parties from seeking mediation as a mutually satisfactory process.

The Mediation Act is currently silent upon the procedure and enforcement of international mediation in India. Thus, more amendments can be seen in the future for when India ratifies the Convention.

Domestic mediation:

The Draft Mediation Bill contemplated mandatory mediation for domestic disputes where in section 6 of the Bill No. XLIII of 2021 read as follows:

6. (1) Subject to other provisions of this Act, whether any mediation agreement exists or not, any party before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act.

However, this proposition has called out for objections from various stakeholders including advocates A major concern expressed has been the potential of mandatory pre-litigation mediation being tantamount to denial of access to justice. The Parliamentary Standing Committee constituted for the Bill considered the concerns expressed and recommended against such a mandate. Therefore, pre-litigation mediation was made optional in the current version of the Mediation Act.

Definition of mediation:

The definition of mediation under Section 3(h) of the Act is comprehensive and inclusive. Irrespective of whether it is a mediation, pre-litigation mediation, online mediation, community mediation, conciliation, or anything of similar import, any process “whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person referred to as mediator, who does not have the authority to impose a settlement upon the parties to the dispute” shall constitute mediation. Hence, distinction that had been created in earlier statutes such as section 89 of the Code of Civil Procedure, the Indian Companies Act, 2013, the Arbitration and Conciliation Act, 1996, etc. by referring to mediation and conciliation as two distinct processes, has been done away with under the Act.

A push towards a facilitative approach

There are different styles of mediation: facilitative, evaluative, narrative and transformative. Expert mediators assess the needs of the participants and the nature of the conflict to switch from one style to the other. Of these, facilitative mediation is the most popular, particularly in the context of commercial disputes. It is focused on reaching a settlement of the dispute through decision-making by the participants themselves. The mediator has no decision-making power and merely facilitates the negotiations between the participants. Since the process provides opportunity to the participants to discuss their fears and concerns in private sessions with the mediator under the cover of confidentiality, the facilitative style is suitable for varied types of disputes including workplace, family, business, commercial and contractual.

Though the Act does not mention any particular style of mediation by name, the thrust of its provisions points more to the facilitative style. Section 15(3) mandates the mediator to be “guided by the principles of objectivity and fairness and protect the voluntariness, confidentiality and self-determination of the parties”. Section 16(1) provides that the mediator shall attempt to facilitate voluntary resolution of the dispute by facilitating communication between the parties and helping them in identifying the issues, clarifying priorities, exploring areas of settlement and generating options. The thrust is on the mediator acting as a mere facilitator and not adjudicator.

Section 15(4) as an enabling provision, provides flexibility to the mediator to take such measures as may be considered appropriate including holding joint and separate meetings with the parties. This indicates that the Act provides mediators the autonomy to decide and structure the process in a manner that suits the needs of the parties as long as it does not interfere with the autonomy of the parties.

B. Promote institutional mediation:

As a pioneer, the Mediation Act seeks to promote institutional mediation in India. The Act contemplates two kinds of institutions, viz. mediation institutes (MIs) that would provide training to mediators and mediation service providers (MSPs) that would provide mediation services to parties desiring to pursue mediation.

One of the main challenges to the growth of mediation earlier was lack of standardization which led to the inconsistent application of procedures and lack of institutionalization. There was a dire need to foster the growth of institutional mediation for promotion of mediation and training of mediators. Further, unlike the West, mediation in India was not considered as a full-fledged profession. A profession creates competition and competition leads to quality. Mediators have to possess the requisite professional skills and therefore need to undergo the requisite training, The Act therefore highlights this aspect and confers the necessary gravitas on mediation as a profession by making provisions for the training and accreditation of mediators, the establishment of mediation institutions like training institutes and mediation service providers and conferring legal executability on mediated settlement agreements (Chapter IX). The Fourth Schedule amends section 89 of the Code of Civil Procedure to empower courts to refer disputes pending before them to even a private mediation service provider or mediator if so opted for by the parties.

Institutional mediation has become the need of the hour. An institution acting as a bridge creates a favorable environment for parties to pursue mediation. The institution provides facilities such as communication, translation, case management and physical infrastructure for smooth and expeditious mediation. As opposed to ad-hoc mediation, parties opting for an institution adhere to the rules of the institution governing the process. This reduces uncertainty and increases objectivity and predictability in the process. In addition to facilitation, training of individuals including mediators and parties is an important service provided by an institution. Mediation as a specialized party driven dispute resolution process requires training in unique skills such as mediation advocacy, party sensitization and confidential communication.

C. Enforcement of Mediated Settlement Agreements:

Chapter VI is perhaps one of the most important parts of the Act dealing with settlement agreements reached through mediation. Section 27 declares the finality and binding nature of the MSA on the parties to the mediation. Section 27(2) of the Act provides for the enforceability of a mediated settlement agreement under the Code of Civil Procedure as if it were a judgement or decree passed by a court. It can also be relied on by a party to defend or claim set off in any other legal proceedings. In addition, Section 28 provides a very narrow scope for challenging a settlement agreement by restricting the grounds to fraud, corruption, impersonation or pertaining to matters declared unfit for mediation under Section 6 of the Act.

A point for consideration is the 90-day time limit for challenging the mediated settlement agreement. According to the Act, 90 days commence from the date on which the party challenging the settlement agreement receives the copy of such settlement agreement. Irrespective of the prescribed time limit, it is a matter of fact that a competent court or tribunal has the discretion to extend the period by an additional 90 days. How strictly these timelines are adhered to, can only be seen when cases of fraud, corruption or impersonation arise much after the expiry of 180 days.

D. Establish a regulatory body:

Regulatory bodies play a critical role in overseeing and regulating professional conduct, education, and standards of practice within their respective industries. These bodies are established to maintain ethical standards, uphold the quality of services, and protect the interests of the public and professionals. Mediation as a professional skill practiced for resolving various disputes necessitates a regulatory body. Chapter VIII of the Act provides for the establishment of a 'Mediation Council'. However, attention has to be given to the composition of such mediation council. Every professional regulatory body is usually controlled by members of that profession who are elected to such a body – be it the Bar Council or the Medical Council or the Institute of Chartered Accountants of India. the appointment and membership of the Mediation Council under section 32(1) including the Chairperson is by the Central Government. In addition, it comprises of an ex officio member, the Secretary to the Government of India in the Department of Expenditure, Ministry of Finance or his nominee. In lieu of the duties and functions envisaged in Section 38, including laying down of guidelines for manner of conduct, regulating the mediator qualifications and skills, maintaining ethical standards and promoting international arbitration in India, it is imperative that the Council responsible for such crucial functions be headed and driven by members of the same profession. A way forward for growing India as a robust Centre for international arbitration, hence, requires the inclusion of mediators and mediation advocates in positions of decision making. In addition, a commendable discretion awarded to the council is the ability to constitute committees of experts for discharging the above-mentioned functions and ensuring efficient functioning of the mediation system in India.

E. Encourage community mediation:

Community dispute resolution as an informal, cooperative, and mutually inclusive process is not novel to the Indian society. Since ancient times, regional governance systems such as panchayat raj have proven their efficiency in ensuring comity among residents of an area. Nevertheless, modern day residential settlements and social arrangements such as colonies, societies, gated communities, and community service groups also pose similar challenges of peace and tranquility, which can now be resolved through mediation. Community mediation introduced by the Act serves as a stepping stone towards building awareness and sensitizing local population of the benefits of an interest driven dispute resolution as opposed to one driven by sentiments.

The Act in Chapter X details the procedure to be followed while conducting a community mediation. It provides for an application to be made to the Authority constituted under the Legal Services Act, or, if no such Authority has been constituted, to the District Magistrate or Sub-Divisional Magistrate for maintaining peace and harmony amongst the residents or families of any area or locality. Upon receipt of such an application, the concerned authority is required to constitute a panel of three community mediators. The concerned authority is a society to constitute a permanent panel of mediators consisting of 'a person of standing and integrity and respected in the community', any local person whose contribution to the society has been recognized, a representative of the area or resident welfare association and any other person deemed appropriate. Representation of women or any other class or category of persons on the panel is only recommended but not prescribed.

Significantly, sub-section (4) of section 44 of the Act states that any settlement reached in a community mediation shall only be for the purpose of maintaining peace and harmony and shall not be enforceable like a decree of the court as is the case with other settlement agreements under section 27 of the Act.

F. Make online mediation acceptable and cost-effective:

The pandemic has emphatically established the role of technology in the justice delivery system. The Indian judicial system has significantly adapted to technology and decided to continue with hybrid hearings even post pandemic. Mediation particularly has been found eminently adaptable to technology because of fewer formalities and paperwork involved. The Act provides statutory recognition to online mediations in Chapter VII but makes it mandatory to have the written consent of the parties for online mediation. Emphasis is laid on maintaining confidentiality and integrity of the proceedings and the communications that take place in the conduct of online mediations. The process is left open and may, perhaps, be dealt with under the Rules that would be framed.

G. The Challenges:

1. The First Schedule of the Act, that exempts certain disputes from being mediated is also a problem area as many of the disputes listed therein are amenable to mediation and there is no point in placing a statutory restriction on mediating these disputes. The applicability of the act should not be unduly restricted and must embrace a broad category of disputes.
2. Time limit for the completion of mediations has been introduced under section 18 with the intention of expeditious and efficient dispute resolution. However, it can be argued that, Mediation being a purely consensual process giving every right to one or all of the parties to withdraw from the mediation, placing a time limit for completion hampers the freedom of the parties to continue with the process if they feel the need for it.
3. Section 5(2) of the Act excludes the pre-litigation mediation of disputes of the Specified Value under the Commercial Courts Act, 2015, from the purview of the Mediation Act. This contradicts section 5(1) which provides that parties, before filing any legal proceedings in civil or commercial disputes, may opt for mediation and further restricts the applicability of the Mediation Act only to those commercial disputes that fall below the Specified Value prescribed under the Commercial Courts Act.
4. Section 5(1) of the Mediation Act states: “(1) Subject to other provisions of this Act, whether any mediation agreement exists or not, the parties before filing any suit or proceedings of civil or commercial nature in any court, may voluntarily and with mutual consent take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act”. This brings us to the question as to why the parties need an additional step of mutual consent even if a valid mediation agreement already exists.

The Way Forward

Though the Act is timely and confers legitimacy and gravitas on mediation as a dispute resolution process, it definitely does need help and support to ensure its effective implementation. Traditional systems of dispute resolution such as litigation have been deeply engrained into the minds of the Indian society. Litigation is the only binding and legitimate form of dispute resolution. There is a reliance on courts for creating equitable and justiciable outcomes more than any other form of voluntary dispute settlement processes. There is a genuine need for judicial bodies such as the courts, Lok Adalat and several tribunals towards encouraging and spreading awareness about the numerous mutual benefits of mediation for the parties and courts. Increased referrals, adherence to the time limits and persuading parties towards opting for mediation can in turn reduce the piling burden of the courts. Further there needs to be an additional focus on maintaining the quality of mediation by framing rules and policies that ensure value maximization and party autonomy. Alternate forms of dispute resolution such as mediation and arbitration still lack the necessary awareness among the public. The Mediation Act is a step in the right direction towards breaking societal, cultural and legal barriers among disputants and driving them towards exploring speedy, voluntary and efficient means of dispute settlement.

Authors: AJ Jawad (Mediator and founder of Training for Excellence in Arbitration and Mediation) And Tariq Khan, Advocate. Views Are Personal.